Ok, the preliminary numbers are out from the board. Typically when the actual numbers come out we see some slight differences as the last remaining sales are reported (Realtors have 2 days to report a sale), so I expect the official numbers will show a few more sales, and slightly lower inventory (that is what we normally see). That being said….here goes the preliminary analysis…
By the way, we’ve put up a video in this post that discusses a “behind the numbers story” on sales.
In brief here are a few things that stand out to us. The average price for all of last year was $338,009 and the average to July 2008 is $338,295. The average price dropped almost 2% this month largely do to poor performance in condos with respect to pricing.
New listings to sales show the trend towards balanced market continuing July started out as a quiet month for our company, but the last half of July saw us extremely busy – to the point where we are extremely low on listings.
Inventory seems to have crept up again, but as I mentioned before the official number will likely be lower as the remain sales for the month are yet to be reported.
Sales this July than were better than 4 out of the previous 5 years.
As you can see, based on price per square foot both single family homes and condos dropped, but condos dropped more significantly than single family homes.
More analysis when the official stats are released by the board next week. Have a great weekend!
I think sales are be higher this July than last for two reasons:
Prices have fallen and lower prices bring more buyers. I think these moves down in prices happen when sellers finally lower prices enough to generate sales. Look last fall which brought lower prices with a sales bounce.
Sales last July were in free-fall. Its not really that we are breaking out of the trend now we are just comparing to worse numbers from last year.
***Bearclaw I don’t think that the pricing has anything to do with it. If you look at June 2007 or near the peak in terms of pricing you’ll see sales were at their highest levels ever.
I think it has more to do with how the herd moves. People seem to buy in packs and hold off the same way.
btw I do think you do an awesome job on your blog.
Although I disagree with some of your stuff you present a very good arguement the majority of the time.
Sheldon
correction
I think these “moves up in sales” happen when sellers finally lower prices enough to generate sales
BearClaw,
I couldn’t agree more. We are just in the beginning stages of the fall down trend. Sellers will realize now that summer has come and gone they have to do something if they want to sell. It’ll be interesting to see where we’re at by Christmas.
If only there was a way to short this market.. I’d be all over riding this pig into the ground.
We took a drive through Northeast Edmonton today, viewing both newer and more established neighborhoods. The number of For Sale signs is just astonishing!
On the Web, I usually look at what’s happening above 600K. Seeing the enormous number of entry-level and mid-level homes available is sobering.
Despite the recent price reductions, a large chunk of our population still can’t afford to get into the market without seriously impacting their disposable income for years to come.
That does not bode well for anybody else who depends on a strong entry-level market to move up the property ladder…..
Looking on presented charts it seems that inventory is falling very fast, but when looking frequently at:
http://www.coldwellbankerpanda-stalbert.com/search_mls_map_form1.php
I see that inventory is rather raising up in last weeks. For example, now it is 16500 listings in total, while couple weeks ago number of listings was about 15000.
What is the reason of that difference?
The other interesting thing is that number of cheap houses does not decrease. For example, in St-Albert number of houses below 300k is now equal to about 20, while couple weeks ago it was about 15. If number of sales increases then what type of houses are being sell the most frequently in this situation?
Hi Rafal,
The numbers your looking at for that site are based on the Edmonton core and surrounding townships together, whereas the stats shown by Sheldon here are only for the city of Edmonton only.
As to your other question, Sheldon and Sara posted some numbers a little while back by area of the city, and I think what your seeing is the newer areas like Twilliger, summerside, etc where all still very popular, while older neighborhoods where being passed over. (in most cases)
Nothing like taking a 10% / $50,000 (average) equity hit in one year! If someone got a 25 yr mortgage @ 5% last year, it would only take 4.5 years of mortgage payments to recover that 10% loss… (10 yrs if they got a 40 yr mortgage @ 5%)
As someone who bought (first time) in December 2007, I don’t actually find the current consternation about inventory levels and prices very troubling. First, I have to pay to live somewhere, and our mortgage payments are reasonably in line with what we’d by paying for a rental. Second, I bought for the long haul/to live in, so I don’t particularly care if prices fluctuate in the short term. Third, unless the world makes some sudden, drastic shift away from fossil fuels as the primary energy source, it’s hard not to imagine that the long haul will prove very positive.
Short of having a crystal ball, why beat yourself up about timing the market just perfectly? I don’t get that, frankly, nor do I get the people who pretend to see the future of the Edmonton housing market with any clarity.
Rafal and sabb,
That web site is the same situation as the polaris one that I follow daily. About 8-10 days ago I noticed that sales and expirations are not coming off the totals, so there is something wrong with their web site. When the site is working properly the inventory is updated every 30-60 minutes and builds during the day and then when I get up in the morning the sales and expirations have been taken off and the totals are lower than the previous evening…the same way the mls listings work. However for whatever reason this is not happening as the totals are the same in the morning as they were in the evening prior and then inventory continues to build during the day again.
Tony,
You’re right if someone bought in July 07 and sold in July 08, they probably lost 40,000-50,000. You would also be right in saying everyone who bought from July 1965 to July/2003 is up 200,000-300,000. Which do you suppose represents the much larger number?Incidentally the stock market has performed worse in the last month than the housing market in the last year. Nothing goes up forever nor does it go down forever.
tcho,
You bought pretty peak, what made you do that?
tcho,
That’s unfair, I take that back if you needed a place to live.
The kool-aid was in your face then too “buy now or be priced out forever” blah blah blah, ya ya ya …
Brent,
July 2007 avg. home price (according to Bob T.’s site) – $442k
Dec. 2007 – $391k
July 2008 – $393k
I fail to understand how tcho bought at a peak?
I bought in Dec 07 too and I can confirm that prices for similar properties to mine are down about 10K in my area since then. I’m thinking the average is being propped up by buyers who are spending the same but getting more for their money, such as upgrades or a newer home. Prices are definitely down from Dec 07. One look at the asking prices on the MLS.ca will confirm that.
On a positive note, what I am hearing at the water cooler and in the coffee shops is a renewed interest in real estate. Potential buyers are sounding happy with the selection and confident that they are now starting to get a deal. I’m seeing hold outs on both sides of the fence starting to make deals. Buyers and Sellers who normally would have bought/sold in April/May and who held off to see what would happen in the market, now seem to be doing business. This supports Sheldon’s analysis that sales are higher than normal for this time of year. My personal opinion is that the seasons have little effect any longer on Edmonton resale prices as both buyers and sellers are quite savy. Overall, I feel the market is healthy.
It was the best of times it was the worst of times (think thats how it went)… Now that oil and most commodies are well off their peek and more people are starting to beleive that the only way they are going is down how will that affect us? Now that Alberta is essentialy a one trick pony (forestry is all but dead) if and when oil drops back down to $80 or lower what is that going to do to the governement coffers (projects payed for by oil revenue) and the oil/gas projects that are planned? Sure by historical terms $80 a barrel (I pick this number because I’ve heard it mentioned several times recently by analysts) is still high, but it is almost half of what it had been, thats got to hurt some. With related costs like they are (wages) will profits still be enough to continue this boom? And if not where does that leave us now that Alberta’s prosperity seems to rise and fall with the price of oil…
Interesting times thats for sure.
Thank you for letting me talk.
Fred
Alberta’s prosperity is based on $45 oil and $7 Natural gas, so anything above that is gravy and all that investment will go ahead as announced/planned.
As far as $80 oil price goes most analysts used those numbers to value Oil company stock. So even when oil was at $145 or $120, Oil companies were still trading like oil was at $80. Now these same Oil companies are valued at a lot less, but that has nothing to do with the price of oil, but the perception about the economy and the effect it has on investor sentiment. I still think by next year oil will be $150 again and maybe just maybe, the stock market will finally trade Oil companies at proper valuations. Well I’m hoping anyway.
And as far as Alberta’s one trick pony goes, the best thing that could happen to Alberta is oil prices going back down to $60 to $80. It would help cure the anemic growth rates and higher inflation rates the Western World is feeling. But I don’t think that’s going to happen, because even though oil prices may, in the short term, go down to $100, they won’t stay there for long. To much demand growth in the rest of World and even the decreasing demand from the Western world won’t be enough to balance out the supply demand equation.
As far as the economy’s of North America and Europe are concerned, I think they are in for a prolonged period of very very slow growth. But there is a silver lining in there… interest rates won’t be going anywhere soon. This can only help the anemic growth the Western world is going to have to deal with for the next couple of years. Inflation will still be there but I think we will just have to live with it.
It is interesting times for sure. But at least Alberta with it’s billions and billions of dollars worth of investment is better suited to ride out this slow period better than any other place in the Western World.
Hi,
I don’t think that the pricing has anything to do with it. If you look at June 2007 or near the peak in terms of pricing you’ll see sales were at their highest levels ever.
I think it has more to do with how the herd moves. People seem to buy in packs and hold off the same way.
That’s good job to post this stuff here.
Prices are going down, or at least not going up so significantly. It is jsut a matter of good pricing by the sellers. You say in the article that condos are doing poorly, but have a look at the pre-sales, which are going higher than before. Resales are steady but only due to lack of buyers. And the mortgage cut isn`helping. And frankly, who is going to buy in summer? Everyone is either on holidays or working abroad to make enough money for a condo for example. I think that the majority of sales will happen after the holiday and summer period. September and October are going to see some serious action.
Elli
Serious Condo action in Sept/October Elli?
Not sure what you are basing your predictions on, gut feeling? Stats and logic don’t seem to support your hopes.
Credit is getting tighter in Canada and it’s almost become common knowledge that real estate is due3 for a correction. If the U.S. enters into a 3rd or 4th year of dropping real estate prices, I wouldn’t bet on Canadian values maintaining their 50% lead over the same homes to the South.
I believe that the market will react to migration of people in or out, and that evrything else will prove to have little effect.
The people migrating into Alberta now can’t even speak English. They load upon a bus with 25 other non English speaking people every morning from your local motel and go to work. Their transcient and not shopping for a home.
Condos in the south end have gone so far down in price I can’t sleep at night.
I don’t plan on staying in Alberta for another 5 years either. I am kicking myself for buying in Apr 07 that is for sure. It seems I will be taking a loss if I leave in the next 3 years.
Does anyone think we will ever crawl back up to Apr 07 prices in the next 2-3 years? Or is it just too hard to tell?
finnkc,
Sorry bud, prices are going lower and the bottom is still a long ways away. We just started are decent, the U.S. has had two years on us already and their no where near the bottom. Real estate can go up very fast and even form a “bubble” but once that “bubble pops” the down turn is a long slow spiral.
finnkc,
Best advice – don’t panic. Yes the market value of your place is currently lower than when you bought it, and 2-3 years from now it is very possible that it will recover and you may even be at a higher market value, it could still be lower than your purchase price….
Anyone who can predict the future has already won the lottery…
Yes at a macro level the US is/has been in some trouble. However, there are still some places in the States that are not in the doom and gloom status like California and Florida.
Like there – Canada is, and will always have areas of prosperity (currently western provinces) and areas of depression (currently Ontairo/Quebec).
Just my $.02
Brent:
Learn a bit of grammar yourself before you go knockin on immigrants pal!
Rhettro, name those places, Edmontons prices are down 10% yoy another 10% would cause a critical if not fatal injury to the Edmonton RE industry, i fear that its now much to late to exit the market, losing your down payment is one thing, having to write a cheque to the bank when you sell is another one all together.
Tony, I am not sure that the Edmonton Real Estate industry as a whole would sustain a fatal injury if prices dropped another 10% from the peak.
The pain would be mainly felt by people who bought relatively recently and had hoped to turn a quick profit, or by people who have leveraged their homes to the hilt and need to sell for reasons other than “flipping”.
I don’t feel particular sympathy for either group.
From June to July, the overall inventory of residential MLS listings only dropped by 316 units. Assuming a similar listing and sales trend, it would take about 33 months to absorb that inventory.
So, without a price drop that could bring new buyers into the market, there is already a lot of hardship in the cards for many vendors whose financial viability depends on a sale.
Brent,
don’t underestimate the potential of immigrants… I am one of them. This is the fourth country I lived in, and I have worked and owned real estate in three of them.
Most of my coworkers are first or second-generation immigrants as well, and the vast majority of them own their homes. For many, their culture prompts them to pay off their mortgage as quickly as possible.
Many others manage to own their homes and live without any credit card debt, although they can’t get the jobs they are really qualified for, for lack of “Canadian” experience.
Many of the people who are taking a bus from a motel right now to go to work might just surprise you, a few years from now, when they take possession of their first home in Alberta.
There are probably tons of Canadian-born transient workers here who are not planning to stay, either. And that will keep the rental market alive….
add another 10% price drop to the existing 10% price drop, and add in the realtors 6% selling fee, a 26% loss would collapse the RE market completely, especially considering it only took 12 months for this to occur.
with tightening lending standards ahead, i see rapidly falling prices ahead.
mdm,
“The pain would be mainly felt by people who bought relatively recently and had hoped to turn a quick profit, or by people who have leveraged their homes to the hilt and need to sell for reasons other than “flipping”.”
So who doesn’t fall into that category that bought in the last two years. Zero down and 40 year mortgages were the craze, leveraged to the hilt!
Just had my current home evaluated by the bank for a home equity loan. The bank and the evaluator both said that the rule of thumb for Edmonton home values (at this time) is you use 85 percent of your 2007 property assesment, so in their eyes a 15 percent year over year drop (just about fell over when I saw the amount they figured my house was worth compared to what I thought it was worth, theirs was much lower). Wonder if when you factor in less price per sq. foot with the 10% the market says brings you closer to a 15% slide(or is the cities assesment inflated).
(sorry for the spelling)
Thank you.
Tony,
You are correct – who wants to write a cheque to make up for any negative equity – and that could happen for some people.
As for specifics – sorry, I cruised the net a little to get some actual numbers but was unable to find YOY comparisons. All I know is that in some of the reports that have come across the wire there have been some places in the US that had small increase (1-2%) generally though I think these were smaller states such as those in the northeast.
My point was that on a macro level an entire country can be doing poorly, but in micro spots – there are still opportunities for growth. IMHO the same can be said for Canada – and that we are one of those micro spots.
Also what I was trying to convey to finnkc was that in these times of uncertainty it is important to keep a level head and not fall into a state of hysteria…
Calgary does daily stats and it’s starting August ugly.
http://www.findcalgary.ca/index.jsp
“But I would bet that a huge portion of the population hopped on board the HELOC train and spent some of that equity they thought they had. These people will be hurting if interest rates go up while their homes values dwindle.”
This is a great point! Not only those who were speculating in 2nd and 3rd properties are biting their nails right now. Those who have owned for years and have been treating and spending their home equity like lottery winnings also have a lot to lose. You gotta love the CHIP home equity loan commercials targeting seniors with the intent to lure them back into the debt they once fought at 18%. Classy move by the bankers.
For those of you looking for gently used late model vehicles, stay tuned to autotrader as more and more people who bought with equity they no longer have look to unload.
ps I just bought a house in the Southwest as I will be moving to Edmonton for school this fall. After considering the cost of renting and the fact that I will be in the city for 4-5 years, buying seemed like the smart thing to do. The place I got was originally listed at 360K and I purchased it for 320K. Personally I feel that the correction will be healthy in the long run. If prices go down in Edmonton, they will probably also go down wherever else I live someday. It is all relative for those who own one and focus on paying down the debt rather than dreaming of and spending equity.